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PurposeThe difference between quality grades and quality labels is that the latter are awarded on the basis of production processes, whilst the former are conferred on the strength of the actual production results. In the course of a de-ideologisation of society, it might be assumed that the price differences between quality grades would grow larger and larger, while those between quality labels would tend to shrink. The purpose of this paper is to develop and test this hypothesis.Design/methodology/approachRegressions for the calf market on the one hand and for 4,180 cattle-market data sets on the other are run with Stata.FindingsThe results largely confirm the rising importance of grades between 2000 and 2014. In the period under consideration, a price spread occurs between the individual grades of the Swiss grading system, whilst the surcharge for organic products shrinks. No price discrimination is identified a priori for conventional labels.Practical implicationsThe focus of both chain management and policy makers should be put on effective grading systems rather than on labelling production methods.Originality/valueThis is the first econometrical comparison of the price effect of both grades and labels.
International Journal of Quality & Reliability Management – Emerald Publishing
Published: Oct 3, 2016
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